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Comment by pixl97 | Hacker News Reader

Things do get more expensive as demand increases.

Have you not bought enterprise SSDs up until 6 months ago?

https://cdn.pcpartpicker.com/static/forever/images/trends/tr...

This is the average price of a 256GB SSD. In May 2017 they were just above $100. Soon after that demand pushed that near $175. Just recently that price has dropped as new processes have increased inventories.

> why wouldn't someone undercut the current suppliers

Why would you when all your production is sold out for the next six months?

You don't understand supply and demand curves at all, do you?

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Your comment would have been more valuable without the jibe at the person you were replying to.

Sure, that's the economical aspect of it.

On the other hand it means the technology is established and people prefer to buy SSDs over HDs. Speaking of myself, I wouldn't consider buying an HD laptop ever again.

This means companies can invest in very long-term endeavours to transform their HDD production businesses into SSD production businesses. The costs are high but the risk is low, lower or at best equally high of continuing with HDDs if you ask me.

The article below has a graph showing the number of "Client SSD vs HDD units" shipped by Samsung over the last 6 years. Given current trends, the SSD shipments will very likely exceed HDD in the next 12 months.

https://www.theregister.co.uk/2018/11/23/ssd_market_q3fy18/

That's interesting and thanks for the link.

I would have guessed SSDs surpassed HDDs already since 2 years on the Client.

Is average price that useful in this context? Surely there would be very fast high end drives that would push that cost up?

It seems you are much smarter than the rest of us when it comes to understanding supply and demand curves, but why don't you help us walk through an example, okay?

Suppose it costs -- and I am making this up -- $10 to produce the first 1000 units, but only $1 after that.

Suppose people are charging a lot of money, say $50 for a unit.

Won't you increase production to try to capture that demand.

After that, because you have increased production you enjoy economies of scale, and the price comes down.

If you are the only producer, you have no incentive to come down, but if there are other producers you will want to undercut them. In this case, you will bring down your price to gain more market share.

Please help us understand what we are missing with your shrewd understanding of supply and demand curves.

Because supply and demand curves aren't smooth - Increasing production scales linearly up to a point, and then you need to build a new factory. Samsung is pumping out all the SSDs it can produce. It is probably also building new factories, but the capital investment and lead-time on that are significant, and until those factories come online, they're simply sunk cost.

Customer demand is not smooth. I will buy precisely 0 SSDs at prices > $125 per 1T drive, and I will suddenly buy 4 as soon as the price drops below there. There are thousands to millions of other customers will scattered plot points around that area, but while you can draw a smoothed graph over them and be reasonably correct, they do not actually represent a mathematical law.

Further - Information is imperfect and markets, for all their elasticity, are only trending towards efficiency.

This all assumes you're arguing in good faith. This in itself is an unreasonable assumption - Your last, mocking line seems to belie it. As does this line.

Nothing in the argument I laid out has anything to do with smooth curves. The same arguments apply for lumpy or unsmooth curves.

OP was talking about 10 year lags! Please read the whole thread in context.

NAND prices have dropped considerably over the last 10 years, but not as fast as hard drive prices.

https://static.seekingalpha.com/uploads/2017/9/24/9577541-15...

Increasing production of semiconductors means bringing up a new fab. It's incredibly expensive and takes years.

Samsung et al do build new fabs, but at a significant lag to demand for logistic and risk-mitigation reasons.

It seems that you assume that if one producer sells its product for slightly less than its competition, then it will get all the customers, à la Bertrand competition.

But if it is not the case, and lowering your price only wins you _some_ but not all customers, then there is no reason to expect that the price point that balance gaining new customers vs selling each product for less will be equal to the marginal cost and not above.

That the growth of demand is outpacing the growth of supply. I thought he was fairly clear about that.

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